Stockbrokers failing clients, says regulator
SMALL investors and pension funds do not always get the best deal from some stockbrokers and investment firms, the Central Bank has indicated.
This is because too often investment companies and stockbrokers do not make sure investors get the best price for shares and the lowest commission, the probe by regulators found. The latest findings on stockbrokers and investment companies come as a string of controversies hit the banking and financial sectors.
A probe by the Central Bank examined 32 investment and stockbroking firms with retail and professional clients to see if they were abiding by EU regulations.
The firms must adhere to what are known as "best execution practices". Buying or selling financial products for clients on a 'best execution basis' means firms must take all reasonable steps to get the best possible result for their clients.
This involves getting the best price of shares or units, and operating speedily and keeping fees and commissions down.
"Firms must ensure the information provided to clients is of a sufficient quality for the client to make an informed decision about whether to use the investment services offered by the firm," the Central Bank said.
But regulators were not happy with the initial probe of the 32 firms and has told them they need to do more.
Three of the firms, which were subject to a more detailed examination, were told to look again at how they treat retail investors.
None of the firms were named, as this is prohibited under the law. A spokeswoman for the Central Bank confirmed yesterday that it has not made any request to the Government to change the law to allow it to name errant financial firms.
Director of Consumer Protection Bernard Sheridan said: "Clients must have confidence that investment and stockbroking firms will act in their best interest at all times, and will have arrangements in place to ensure that all reasonable steps are taken to deliver the best possible result for them.
"Best execution is a crucial aspect of client protection. It is important that the highest standards of due care and diligence are followed by a firm when carrying out orders for clients."